Investment training group

ByRobert EdwardsNovember 19, 1980

Could you tell me about the legality of an educational and nonprofit group investing program? I propose to organize a group of students who would pool small monthly contributions for the purpose of investing in shares of one or more companies. Earnings would be reinvested. The venture is intended to be educational and permit students to attend stockholder meetings in order to study corporate organizations. -- F. N.

Your proposal is similar to an investment club, where adults pool regular contributions and meet to decide where to invest funds. Their purpose is similar to yours, with some differences. The discipline of studying companies and deciding where to invest pooled funds can be educational, and many clubs earn high returns from their investments. For more information, you may write to the National Association of Investment Clubs, 1515 East Eleven Mile Road, Royal Oak, Mich. 48067.

However, your proposal may not be feasible for several reasons: (1) A time span of nine months is too short for most investments; (2) contributions are likely to be small and even when pooled could incur high costs from minimum fees; (3) reinvestment of earnings would have minimal effects over the time period involved. A far simpler way would be to play the game with paper funds. A certain realism would be lacking, but once students began thinking in terms of real money, the educational benefits would likely be equivalent, with far less trouble.